Whether AMP is a worse or better company in every single way than AGL is a truth or fiction that is yet to play out, however it's an unattractive and unproductive way to be thinking about investing. What is truth and has been for many years is that there is plenty of smart money and mum and dad investors that aren't willing to find out whether it is a worse or better company. The lowest share price for nearly 19 years is proof of that.
AGL - AGL Energy
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Whether AMP is a worse or better company in every single way than AGL is a truth or fiction that is yet to play out, however it's an unattractive and unproductive way to be thinking about investing. What is truth and has been for many years is that there is plenty of smart money and mum and dad investors that aren't willing to find out whether it is a worse or better company. The lowest share price for nearly 19 years is proof of that.
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Will not contest that, but if you have a best pe around and a business which is still around in 10y, i would not discount that either
Will not contest that, but if you have a best pe around and a business which is still around in 10y, i would not discount that either
Try telling that story to the investors that have been around for the last 10 years?
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I haven't followed AGL and I must agree with you if your analysis of the management is correct, there have been many good companies go down due to poor management.
The situation AGL and Origin find themselves in at the moment, is very much like a lot of sectors including the financial sector, there is rapid change due to technological advancement.
Those that can adapt and manage the transition well will benefit, those that can't will go broke or be taken over.
It is happening in the power sector due to renewables, it is happening in the transport sector due to BEV's and H2, it is happening in the financial sector due to disruptive digital technology platforms like BNPL, bitcoin, blockchain etc.
The only thing that will see a company through, will be a very astute management team IMO.
Just my thoughts.
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Comparing AGL with AMP:
AMP = Company that most Australians have heard of and which "does something with finance" but they're not really sure exactly what. The company's brand value has been trashed and there's no actual need for anyone to use anything they offer.
AGL = Owns medium term (~15 years is medium term in this context) critical infrastructure and reality is that no matter which electricity company you sign up with, if you're in NSW, SA or especially Victoria then AGL is involved with your physical supply chain.
If the company sinks then it'll be due to management alone is my point. The underlying industry is set for massive growth, best explained by pointing out that electricity has a 23% share of secondary energy, that is energy supplied to consumers, in NSW and it's 20% in SA and 17% in Victoria (Australian government statistics).
Everyone from progressive, and even conservative in many cases, governments through to the likes of Elon Musk and Bill Gates want that figure to be very much higher. We're heading into an increasingly electrified world, not one that involves continued dominance of oil and gas at the point of consumption.
If AGL somehow fails then it'll be a company-specific management problem that does it. There's certainly others in the industry quietly getting on with it and preparing for the future in a way that doesn't involve bashing heads with anyone.
That said, I certainly wouldn't deny that the company's former CEO wasn't at all helpful. It takes quite some doing to get everyone from the unions to the Liberal Party against you and the fallout from that sort of thing takes years to overcome. I mention politics since in this business it's inescapable, that's the reality of it, so no point trying to pretend otherwise.
AMP = Company that most Australians have heard of and which "does something with finance" but they're not really sure exactly what. The company's brand value has been trashed and there's no actual need for anyone to use anything they offer.
AGL = Owns medium term (~15 years is medium term in this context) critical infrastructure and reality is that no matter which electricity company you sign up with, if you're in NSW, SA or especially Victoria then AGL is involved with your physical supply chain.
If the company sinks then it'll be due to management alone is my point. The underlying industry is set for massive growth, best explained by pointing out that electricity has a 23% share of secondary energy, that is energy supplied to consumers, in NSW and it's 20% in SA and 17% in Victoria (Australian government statistics).
Everyone from progressive, and even conservative in many cases, governments through to the likes of Elon Musk and Bill Gates want that figure to be very much higher. We're heading into an increasingly electrified world, not one that involves continued dominance of oil and gas at the point of consumption.
If AGL somehow fails then it'll be a company-specific management problem that does it. There's certainly others in the industry quietly getting on with it and preparing for the future in a way that doesn't involve bashing heads with anyone.
That said, I certainly wouldn't deny that the company's former CEO wasn't at all helpful. It takes quite some doing to get everyone from the unions to the Liberal Party against you and the fallout from that sort of thing takes years to overcome. I mention politics since in this business it's inescapable, that's the reality of it, so no point trying to pretend otherwise.
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I doubt agl had among the best pe around 19y ago, luckily these investors went into hyped new renewable energy stocks ..i mean like..for the one which cost me money:
IFN wind power, GDY: hot rocks CCE (carnegy) wave power
See my point?
at least these investors still got some value in their shares and even dividends along, and that was during a maxi bull market
Dyor, you can try to be smarter in entries etc but i still value AGL as a buy and store away stock since in its $10 SP in the current stage iof the cycle.
Do not worry, my exposure is minimal and most of my investment is dynamic as per my trading system journal
But if i was in a buy and forget mood, AGL would be part of the mix, with banks a few BHP Rio gold silver wow and col, and bonds/cash
i will stop my entries here.lets agree we disagree.i still value PE
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The way I see it there are others with vastly inferior assets (higher cost to operate, in worse shape technically and with a less critical function and thus pricing power) and no real company brand value at the retail level. Despite that they're making money.
If AGL with better assets and a very well known retail brand name can't make money for shareholders over the medium term then something's wrong.
If AGL with better assets and a very well known retail brand name can't make money for shareholders over the medium term then something's wrong.
Comparing AGL with AMP:
AMP = Company that most Australians have heard of and which "does something with finance" but they're not really sure exactly what. The company's brand value has been trashed and there's no actual need for anyone to use anything they offer.
AGL = Owns medium term (~15 years is medium term in this context) critical infrastructure and reality is that no matter which electricity company you sign up with, if you're in NSW, SA or especially Victoria then AGL is involved with your physical supply chain.
If the company sinks then it'll be due to management alone is my point. The underlying industry is set for massive growth, best explained by pointing out that electricity has a 23% share of secondary energy, that is energy supplied to consumers, in NSW and it's 20% in SA and 17% in Victoria (Australian government statistics).
Everyone from progressive, and even conservative in many cases, governments through to the likes of Elon Musk and Bill Gates want that figure to be very much higher. We're heading into an increasingly electrified world, not one that involves continued dominance of oil and gas at the point of consumption.
If AGL somehow fails then it'll be a company-specific management problem that does it. There's certainly others in the industry quietly getting on with it and preparing for the future in a way that doesn't involve bashing heads with anyone.
That said, I certainly wouldn't deny that the company's former CEO wasn't at all helpful. It takes quite some doing to get everyone from the unions to the Liberal Party against you and the fallout from that sort of thing takes years to overcome. I mention politics since in this business it's inescapable, that's the reality of it, so no point trying to pretend otherwise.
15 years isn't medium term in any context. It doesn't matter who is at fault if and when it sinks. No investor gets rich with a blame contingency as a plan.
A scathing assessment of this woofer on Ausbiz's The Call yesterday. Not for the first time either. Ironically Mathan Somasundarum compared it to AMP ( worse ) and said he wouldn't be interested until he saw the first upgrade. Gaurav Sodhi was even more scathing. There is not going to be an upgrade. Gaurav valued their entire generation suite at zero and detailed that as a stand alone customer service retailing business, it is only worth even a fraction of its current market cap. A huge sell and the very definition of a value trap.
Gaurav wrote this article nearly 7 years ago. He was absolutely on the money.
www.intelligentinvestor.com.au
www.intelligentinvestor.com.au
Electricity disrupted - Part 1
Since the GFC, European power utilities have fared worse than the continent's shaky banks. Gaurav Sodhi explains how solar power has disrupted the power sector. Find out more at Intelligent Investor.
www.intelligentinvestor.com.au
Electricity disrupted - Part 2
The venerable electricity business has become vulnerable. We examine the impact on AGL, Origin, Spark, SP Ausnet and their smaller competitors. Find out more at Intelligent Investor.
www.intelligentinvestor.com.au
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IMO and it is only my opinion, the main problem the major generators have is their competition are in reality passive generator, once it is built the upkeep is minimal.Gaurav wrote this article nearly 7 years ago. He was absolutely on the money.
Electricity disrupted - Part 1
Since the GFC, European power utilities have fared worse than the continent's shaky banks. Gaurav Sodhi explains how solar power has disrupted the power sector. Find out more at Intelligent Investor.
Electricity disrupted - Part 2
The venerable electricity business has become vulnerable. We examine the impact on AGL, Origin, Spark, SP Ausnet and their smaller competitors. Find out more at Intelligent Investor.
This gives the renewables a massive ongoing advantage as well as minimal regulatory costs, apart from upgrading the front end technology occasionally as the regulator requires it.
Another problem the thermal generators have is, they have to keep the lights on and are getting less and less for doing so.
Like I stated earlier, as with motor vehicle manufacturing, they have to accept the reality and transition while they have a customer base and are making money.
The opportunity wont last forever and the last thing I would be doing, is hoping the problem is going to go away.
I don't hold any elect utility shares.
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On a cynical commercial side, agl and other should and will let all maintenance and upkeep go down, then when people are actually all upset after oldies dying like flies in the bext heat wave and matching blackout just say: go and put more windmills, look we are 0 carbon business in 2030, don t blame us, and then they will get proper pricing for their base load.
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for the irony of it, AGL on of my only green today LOL
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One of
That diatribe is symptomatic of a person who had the opportunity to avoid this Kodak moment but didn't. Now you want the stars to align to fix the problem. Investing doesn't work like that.
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There's really two categories of operators in the industry:
Gentailers who own firm generating capacity and a retail business.
"Pure" generators or retailers who do one or the other but not both.
The latter are ultimately either exposed to the spot market, are reliant upon some form of hedging contract directly with someone else or are hedging by means of futures. Versus the former who have effectively indefinite or at least very long term hedging via their own retail business and long term contracts with independent generators (often but not always of 25 year duration) and major industrial consumers (typically 4 - 30 years duration although terms outside that aren't totally unknown).
Once the next crisis comes around, and every now and then the industry has one in terms of pricing, well then you get to find out which of the "pure" retailers and generators didn't do their hedging so well and which ones got it right. That's the point where those who didn't do it well abruptly exit the market with a fire sale of their account base to someone else.
In the context of the states where AGL has a major presence the reality is that AGL, Alinta, Delta Electricity, Energy Australia, Engie, Hydro Tasmania, Infigen, Origin and Snowy Hydro have far less business risk than the others. They can certainly lose money, but the others are ultimately far more exposed - usually with a much smaller capital base as well.
For reference:
AGL retails as AGL, Click Energy and PowerDirect.
Alinta, Delta Electricity, Energy Australia, Infigen and Origin trade under their own name noting that Delta and Infigen retail to large customers only.
Engie retails under the brand name Simply Energy.
Hydro Tasmania retails under the brand name Momentum Energy.
Snowy Hydro retails as Lumo and Red Energy.
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There's really two categories of operators in the industry:
Gentailers who own firm generating capacity and a retail business.
"Pure" generators or retailers who do one or the other but not both.
The latter are ultimately either exposed to the spot market, are reliant upon some form of hedging contract directly with someone else or are hedging by means of futures. Versus the former who have effectively indefinite or at least very long term hedging via their own retail business and long term contracts with independent generators (often but not always of 25 year duration) and major industrial consumers (typically 4 - 30 years duration).
Once the next crisis comes around, and every now and then the industry has one in terms of pricing, well then you get to find out which of the "pure" retailers and generators didn't do their hedging so well and which ones got it right. That's the point where those who didn't do it well abruptly exit the market with a fire sale of their account base to someone else.
Ultimately AGL, Alinta, Delta Electricity, Energy Australia, Engie, Hydro Tasmania, Infigen, Origin, Snowy Hydro and the various Queensland government owned entities (CS Energy, CleanCo, Stanwell, Ergon) have far less business risk than the others. They can certainly lose money, but the others are ultimately far more exposed - usually with a much smaller capital base as well.
You obviously didn't read the article 7 years ago, or listen to the Call yesterday.
If 1 person is fat, then finds a 2nd person who is fatter, it doesn't make the 1st person thin.
In case you hadn't heard, Infigen is gone. Please make an effort to keep up.
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A change of ownership, now being wholly owned by another group, doesn't mean they're not still in business and competing against some (but not all) of AGL's business.
Infigen are gone, They were taken over after years of underperformance and being riddled with debt. They are out of business. Accept you didn't know about it and deal with it. Nice attempt at the post mistake edit though... but you got caught out.A change of ownership, now being wholly owned by another group, doesn't mean they're not still in business and competing against some (but not all) of AGL's business.
Same as Energy Australia being owned by CLP Group doesn't mean they aren't a direct large scale competitor to AGL.
If you think you know better, go and try buying some Infigen shares on the local bourse. LOL
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That the company was absorbed by another company doesn't change the fact that it's still physically in operation and still doing business.
Same with anything. Competitors only benefit from the demise of a competitor if they actually cease operating. Simply getting a new owner but carrying on business means effectively nothing so far as competitors are concerned no matter what the industry.
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